In the light of recently released data by the State Bank in
Pakistan, economist, Ali Salman argues that Pakistan's banking system has become unsound. Banks have been swamped with demands of risk free lending from the government, bulging levels of non-performing loans,drying up of genuine business projects and a general risk aversion amongst the bankers.

The world economy is made up of many tiny parts that are useful only when we combine them into more complex wholes. The higher the value of these aggregations, the more economic growth. Humanity’s achievements – from the 120 ingredients of my clock to the countless financial deals and developments that produced the internet and flight navigation systems – all result from joining people and things to each other. That’s why western capitalism has triumphed for the past 150 years: it gave us the best knowledge to explore economic combinations. Capitalism does not need to be re-thought or re-invented; it simply has to be re-discovered, writes Hernando de Soto in the Financial Times.

In an article- 'The cost of financial ignorance', published in The Washington Post, dated 7 October 2011, Hernando de Soto stresses the importance of documenting assets and transactions for the creation of credit. He explains how the reliability of the records makes credit trustworthy and how it is important to establish the link between who owns what, how much, and who holds the risks. Not having reliable information reduces confidence, leading to credit contractions, fewer or smaller transactions, and declines in demand. And these cause employment and the value of assets to fall.

The financial crisis and BP oil spill are yet another proof that the big government and regulations are a failure. The regulatory agencies protected the interests of the sectors which were being regulated. Another major reason why regulations fail is the knowledge problem identified by FA Hayek, writes Gerald P. O'Driscoll in the Cato Institute. The article was published in The Wall Street Journal on June 12th 2010.

A genuine capitalist economy assumes that each adult individual and business is free to buy and sell anything that they own and then keep the rewards (or suffer the losses) of enterprise. The only legitimate role for government (the political system) is to protect property rights, that is, to enforce contracts and prohibit theft and fraud, writes Dominick T Armentano in The Independent Institute Newsroom .

Communism was characterized by its contempt for private property, by the complete control of the state over the economy, and consequently, by its disregard for price as a signal of scarcity and guide for investment. Over the past two years, the foundation of global finance has been shaken, not because of any Marxian foresight, but because of the failure on the part of the capitalist world to appreciate the relationship between property ownership and valuation of that property, writes Barun Mitra

The process by which banks create money is so simple that the mind is repelled. -- John Kenneth Galbraith How did the modern system of money evolve? It all started with the barter system, writes Vivek Kaul in DNA.

Even a severe downturn can be followed by rapid recovery without aggressive central bank intervention. In the 1921 recession, wholesale prices, industrial production, and manufacturing employment all fell by 30 percent or more within a year. Yet by early 1922, the US economy had recovered fully from its mid-1921 low. What's more, it did so with no help from the Fed, which was determined to let the recession take its course, so as to hasten the restoration of the prewar gold standard. The current recession is probably over, said Ben Bernanke this week. His timing is exquisite. But did his Fed have a role, asks George Selgin in the Christian Science Monitor.

A recent study by the Asian Development Bank (ADB) finds intra-regional trade and investment to have increased sharply following the crisis. The club of sixteen, from India to Taiwan, from China to Indonesia, is a significant entity in world economy. The grouping comprises 49% of the world population, and 23% of world GDP. The Asian Crisis of 1997 has encouraged regional integration, writes Amitendu Palit in Financial Express.